* Italy’s president gives green light to new coalition govt
* China comments soothe worries about tit-for-tat trade spat
* Micro Focus sinks 32% after profit warning
* Bouygues gains on upbeat H1 core operating profit (Recasts, adds details, changes comments, updates to close)
By Agamoni Ghosh
Aug 29 (Reuters) - Hopes of a resolution to a trade dispute between the United States and China pulled European stocks to a near one-month high on Thursday, while the prospect of a new coalition government in Rome sent Italian shares rallying.
The pan-European benchmark index STOXX 600 closed 1% higher as new comments from Beijing signaling willingness to continue trade talks with Washington calmed investors fears over the risk of a global recession.
China’s commerce ministry said both sides were discussing the next round of talks scheduled in September and hoped U.S. officials could cancel the planned additional tariffs to avoid an escalation.
Following that, U.S. President Donald Trump said in a Fox News radio interview that trade talks were scheduled for next Thursday “at a different level,” but did not provide additional details.
“Both of those things, despite being comments that markets have heard a thousand times before helped,” said Spreadex analyst Connor Campbell.
“Markets are so keen at this to hear positive news and just need reassurance that things are not just going to suddenly go south regarding the relationship between China and the U.S.”
Commodity-linked shares rose nearly 2% to lead gains, while defensive plays like utilities and healthcare made the smallest gains.
The technology index moved over 1% higher despite a sizeable drag from British IT group Micro Focus which tanked 31% after warning on profit, citing lower spending by clients.
French conglomerate Bouygues jumped 7%, topping the STOXX 600 after reporting a better-than-expected first-half core operating profit.
The benchmark European index is on track to end August about 3% lower as a deeper inversion in the U.S. Treasury yield curve earlier in the week exacerbated concerns about economic growth in the face of the U.S.-China trade war.
Italian stocks rose nearly 2% to hit its highest level since Aug. 2 as President Sergio Mattarella gave a green light to two former political enemies, the 5-Star Movement and Democratic Party (PD), to form a new coalition government headed by Giuseppe Conte as prime minister.
The move was perceived by markets to reign in stability at the center and could improve Italy’s fractious relations with the European Union.
In Britain, however, fears of a disorderly Brexit weighed on Britain’s mid-cap index, which underperformed the broader markets as Prime Minister Boris Johnson made his most audacious bid yet to take Britain out of the European Union on Oct. 31 by moving to suspend parliament on Tuesday.
Johnson’s move also increases the chance of him facing a vote of no-confidence in his government, and possibly an election. (Reporting by Agamoni Ghosh, Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Bernard Orr and Arun Koyyur)